The Israel-Hamas war, which began in early October, initially rattled global financial markets, sending stocks tumbling, the Israeli shekel sliding and oil prices climbing. The US bond market, which was closed on the first trading day following the war’s onset, in observance of Indigenous Peoples’ Day, rallied the day after as investors hurried to protect their portfolios from geopolitical risk.
About 24% of the companies in the S&P 500 have reported third-quarter results, and 78% of them have beaten expectations, according to FactSet. But that rally has since stumbled, as economic data has showed little sign of cooling despite 11 rate hikes over the past 19 months. Resurging inflation has also sparked fears that the Fed could keep interest rates higher for longer after raising them to their highest level in over 22 years. Those fears took tighter hold after the Fed left additional hikes on the table at its September meeting and indicated it will keep rates elevated through next year.